Slide 1: Third Quarter 2016 Earnings Call
Third Quarter 2016 Earnings Call November 3, 2016 Webcast: ir.avisbudgetgroup.com Dial-in: (630) 395-0021 Replay: (402) 220-0299 Passcode: 2995545
Slide 2: Forward-Looking Statements
FORWARD- LOOKING Statements about future results made in this presentation constitute forward-looking STATEMENTS statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include projections. These statements are based on current expectati
Slide 3: Larry De Shon, Chief Executive Officer
Larry De Shon Chief Executive Officer
Slide 4: Third Quarter 2016 Highlights
THIRD QUARTER 2016 Record Third Quarter Results HIGHLIGHTS Delivered record third quarter revenue, Adjusted EBITDA and margins Pricing in the Americas increased 2% and utilization also rose Manpower and shuttling initiatives drove higher productivity Adjusted earnings per share increased 25% 4
Slide 5: Americas – Pricing Trends
AMERICAS – PRICING Pricing Trends Remain Positive TRENDS Americas Pricing +4% +2% Commercial Leisure Total (1%) Focused on higher-margin channels and segments Used our Demand-Fleet-Pricing system to take advantage of yielding opportunities Aggressively managed our fleet levels ‒ Our third quarter ut
Slide 6: Americas Achievements: Higher Year-over-Year Volume Growth
AMERICAS ACHIEVEMENTS Higher Year-over-Year Volume Growth Americas Volume +2% +2% Commercial account retention continues to +0% exceed 99% Commercial Leisure Total Intentionally ran our fleets tight this summer Our U.S. airport share remains stable 6
Slide 7: International Achievements
INTERNATIONAL ACHIEVEMENTS Delivered Increased Revenue, Adjusted EBITDA and Margins Revenue increased 4% due to higher leisure and commercial volumes (a) Ancillary revenue increased 12% Domestic volume growth remained resilient in Europe ‒ Lower-than-expected European inbound volumes impacted pricin
Slide 8: 2016 Outlook: Well-Positioned Despite Near-Term Hurdles
2016 OUTLOOK Well-Positioned Despite Near-Term Hurdles Americas ‒ Positive year-over-year pricing and volume continuing into the fourth quarter ‒ But demand is softer than previously anticipated, particularly among commercial travelers International ‒ Softer-than-expected demand continues, particula
Slide 9: Investing in Our Business: Efficiency Initiatives Delivering Benefits
INVESTING IN OUR BUSINESS Efficiency Initiatives Delivering Benefits Manpower Planning ‒ Changing the way we approach staffing levels ‒ Repurposing resources to where most needed ‒ Increasing part-time component of our workforce ‒ Next step is to incorporate technology to drive further efficiencies
Slide 10: Investing in Our Business: Avis Now
INVESTING IN OUR BUSINESS Avis Now – The Future of the Car Rental Experience More than 250,000 have downloaded the app Over 150,000 rentals completed Customer feedback has been very positive To sign up, visit www.avis.com/preferred Adding functionality every few weeks ‒ Additional ancillary revenue
Slide 11: Highlights: Record Third Quarter
HIGHLIGHTS Record Third Quarter Continued positive pricing and volume growth in the Americas Carefully managing our fleet levels International volumes also growing Investing in technology to drive efficiencies, lower costs and improve margins 11
Slide 12: David Wyshner, President and Chief Financial Officer
David Wyshner President and Chief Financial Officer
Slide 13: Third Quarter 2016 Results: Record Company Margins
THIRD QUARTER 2016 RESULTS Record Company Margins ($ in millions) Revenue Adjusted EBITDA $2,656 $2,577 +3% $469 $431 +9% 17.7% 16.7% margin margin Third Quarter Third Quarter Third Quarter Third Quarter 2015 2016 2015 2016 13
Slide 14: Americas
AMERICAS Third Quarter Growth Driven by Higher Pricing and Volumes Pricing increased 2% Rental days grew 2% ‒ Leisure volumes increased 2% Adjusted EBITDA increased 10% and margins expanded by more than 100 basis points (a) Rental DaysAmericas Revenue Average Drivers Total Revene Daily Rate 3% 2% 2%
Slide 15: International
INTERNATIONAL Record Revenue, Adjusted EBITDA and Margins Revenue growth driven by positive volumes and higher ancillary revenue Slowdown in inbound volumes negatively impacted pricing Adjusted EBITDA increased 7% and margins expanded (a) International Revenue Drivers 7% 4% 5% Average Daily Rate 1%
Slide 16: Fleet Costs
FLEET COSTS Americas Per-Unit Fleet Costs Expected to Increase 5% (a) Monthly Per-Unit Fleet Costs (Americas) $304 $310 $312 Americas fleet expected +2% $297 +5% to be 67% risk in 2016 and more than 70% risk in 2017 Completed more than 90% of our planned risk- car sales for 2016 Third Quarter Third
Slide 17: Zipcar
ZIPCAR Zipcar Continues to be the World’s Leading Car Sharing Network Surpassed one-million-member milestone Instant Join & Drive surpassing expectations Expanded ONE>WAY offering to Denver Zipcar’s fleet totaled more than 15,000 ‒ Now available in six U.S. cities cars in the third quarter Launched
Slide 18: Balance Sheet: Strong Liquidity Position
BALANCE SHEET Strong Liquidity Position More than $5 billion of available liquidity worldwide Net corporate leverage of 3.4x Redeemed €275 million Only $400 million of corporate debt maturities of 6% notes due 2021 with proceeds from new before 2021 41/8% notes due 2024 Vehicle-backed debt is well-l
Slide 19: Capital Allocation
CAPITAL ALLOCATION Consistent Use of Free Cash Flow Our priorities for free cash flow continue to be share repurchases and tuck-in acquisitions Repurchased $290 million of stock year-to-date 2016 Have reduced our shares outstanding by Announced acquisition of France Cars 12% over the last twelve mon
Slide 20: 2016 Outlook: Revising Estimates to Reflect Current Trends
2016 OUTLOOK Revising Estimates to Reflect Current Trends Americas (a) Full-year pricing projected to be unchanged Volume expected to grow approxmately 2% Currency movements reducing Adjusted Per-unit fleet costs expected to increase 5% EBITDA by $21 million year-over-year International Positive yea
Slide 21: 2016 Estimates
2016 OUTLOOK 2016 Estimates (a) Diluted share count of ($ in millions, except EPS) Projection approximately 93 to 94 million, a reduction of Revenue $8,750 10% to 11% year-over- Adjusted EBITDA 850 year (b) Non-vehicle D&A 195 Expect capital expenditures of Interest expense 205 approximately $200 mi
Slide 22: Free Cash Flow
FREE CASH FLOW Free Cash Flow ($ in millions) 2016E 2015 (a) Adjusted pretax income $450 $546 (b) Plus: Non-vehicle D&A 195 163 Less: Capital expenditures (200) (201) Less: Cash taxes (50) – (60) (29) Plus: Vehicle programs 55 78 (c) Plus: Working capital and other 10 – 50 (32) Free Cash Flow $450 –
Slide 23: Currency Effects
CURRENCY EFFECTS Exchange-Rate Impacts Favorable in the Fourth Quarter, Negative for the Year (a) Year-over-Year Effect of Currency Movements (in millions) First Second Third Fourth Full Quarter Quarter Quarter Quarter Year Revenue ($32) ($12) ($6) $10 ($40) (b) Adjusted EBITDA ($33) $3 $1 $8 ($21)
Slide 24: Summary: Record Third Quarter Results
SUMMARY Record Third Quarter Results Positive pricing in the Americas continues Seeing benefits from manpower and shuttling initiatives Zipcar passed the million-member milestone Investing in technology and process improvement to drive future margin growth Generating significant free cash flow and r
Slide 25: Avis Budget Group
avis budget group
Slide 26: Glossary
GLOSSARY This presentation includes certain non-GAAP (generally accepted accounting principles) financial measures as defined under SEC rules. We have provided below reasons we present these non-GAAP financial measures, a description of what they represent and a reconciliation to the most comparable
Slide 27: Glossary
GLOSSARY Reconciliation of Net Corporate Debt (in millions): September 30, 2016 Corporate debt $ 3,866 Less: Cash and cash equivalents 985 Net corporate debt $ 2,881 Reconciliation of Adjusted EBITDA to net income (in millions): Last Twelve Months Ended September 30, 2016 2015 Adjusted EBITDA $ 845
Slide 28: Glossary
GLOSSARY Reconciliation of adjusted net income to net income (in millions, except per-share amounts): Three Months Ended September 30, 2016 2015 Adjusted net income $ 227 $ 206 Less certain items, net of tax: Acquisition-related amortization expense 10 10 Restructuring expense 5 5 Transaction-relate